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Is the way you take payments killing your cash flow?

Posted 1 year ago in Apps by Guest
Posted by Guest

In this blog post, Rachel Astall, Head of Global Partnerships – SMB Platforms at GoCardless, tells us how automating the process of collecting payments can help businesses thrive.

Healthy cash flow is key to business success yet only 49% of UK small businesses are cash flow positive, according to Xero’s research.

The reasons are often complex but for most it’s linked to the way they collect payments. So how do businesses change their payment processes in order to give their finances the boost needed to achieve positive cash flow?

In this post we outline the challenges of improving cash flow, and how choosing an automated route to payments could be the ideal solution.

Time to pull payments out of the past

Many businesses make use of apps to automate processes and boost productivity. So why is it that in a world of digital innovation 52% of businesses still get their invoice paid through outdated methods like bank transfer?

The small business community has historically been neglected by advances in payments technology with many left hoping that customers will pay on time and making do with payment processes from the last century.

This results in a lot of time spent chasing unpaid bills, straining customer relationships and poor cash flow.

A lack of cash liquidity means:

  • A cash flow gap now when paying suppliers and covering expenses
  • A lack of cash tomorrow to cover your operational overheads
  • An inability to grow in the future through a lack of cash funds or finance.

But payments don’t need to be so painful. Apps like GoCardless allow businesses to take back control of their cash flow and increase productivity by automating the process of collecting payments.

Take control of your cash flow

The ability to forecast cash flow gaps is great and when paired with the tools that enable you to take action, it’s even better. After all, if you’re not in control of your income pipeline and debt collection, then your business is vulnerable.

Traditional payment methods like standing order, bank transfer and even card payment are all initiated by the customer. In other words, you wait for the payment to be pushed to you. However, automated payments like Direct Debit and GoCardless allow you to pull payment from the customer when it’s due, putting you back in control.

And with control comes predictability, allowing you to speed up your payment process so your invoices are automatically paid on time, every time. Typically it takes over 40 days for a UK small business to get paid for a 30 day invoice, however with GoCardless these debtor issues are eliminated.

Taking the pain out of getting paid

With hassle-free and automated Direct Debit payment, GoCardless helps businesses get paid on time, every time – removing their cash flow worries and streamlining their financial processes.

GoCardless and Xero have been working together for a number of years to enable small businesses to improve their efficiency:

  • 84% of Xero users told us they spent less time chasing invoices with GoCardless
  • 82% improved their cash flow and debtor days.

“Having GoCardless really streamlines the whole process of collecting cash – it happens in the background automatically and we don’t really notice. So it’s the reassurance, in terms of cash flow, but also the huge amount of time it saves with all the admin and chasing processes that don’t need to happen anymore, says Sharon Pocock, founder of Kinder Pocock.”

Find out more at the UK Roadshow

Changing the way you get paid is fundamental to taking control of your cash flow. If you’re looking to embrace a new kind of cash flow efficiency, come down to meet the team at the Xero UK Roadshows and find out how to choose the right apps for you.

Places are going fast at the Roadshows so make sure to register for your free ticket now. You can find out more about GoCardless on the Xero Marketplace here.

Author: Rachel Astall, Head of Global Partnerships – SMB Platforms at GoCardless.

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